Nautilus Minerals: still lost at sea with no life raft in sight

Deep Sea Mining Campaign | 25 November 2019

On 21st November, Nautilus Mineral’s court-appointed monitors, Price Waterhouse Cooper (PwC) confirmed that the relevant legal papers had been filed to assign Nautilus Minerals Inc. into bankruptcy. Whilst this news was expected, there has been no news on their plans for the Solwara 1 deep sea mining project in Papua New Guinea, leaving local communities and civil society who are opposed to the project with many questions.

Nautilus filed for protection from its debts in a Canadian Court in February 2019. The company tried to restructure but it failed to find any buyers for its assets. In August 2019, court approval was obtained for creditors to liquidate the company in order to get back a fraction of what they were owed.

Andy Whitmore of the Deep Sea Mining Campaign stated, “This should be the end of the story, but sadly the liquidation was enacted to give birth to a new, smaller Nautilus.”

“The two main shareholders – MB Holding and Metalloinvest – have effectively taken control of this ‘new’ Nautilus at the expense of major creditors and hundreds of small shareholders. Despite filing an appeal in the Canadian Court, through its company Eda Kopa, the PNG Government remains the biggest loser from the deal holding 15% equity in Nautilus PNG and the Solwara 1 project, effectively losing $US125m.”

“Nautilus gave the impression that the new company was ready to roll. But it has been over a month since the confirmation and there’s been no other information on what Nautilus’ new plans will be.”

“Nautilus stated in court papers that, once liquidation occurs, there may still be a buyer for at least some of the new company’s assets. Does this mean the major shareholders will sell their licences and machinery to make a quick profit and run?” questioned Mr Whitmore.

Local communities opposed to Nautilus’ Solwara 1 project in their seas are still steadfastly opposed to the project, and there are still legal cases in the PNG court system.

Jonathan Mesulam from the Alliance of Solwara Warriors has recently returned to PNG from meetings in Canada where he represented the fierce opposition of PNG coastal communities against experimental seabed mining.

Mr Mesulam stated, “It’s unbelievable for Nautilus to still consider mining the Solwara 1 project. Even if free of its long-term debt, this new company is created on the back of the huge financial loss for our government and the people of PNG. Our people want nothing to do with this company and its lies of prosperity. In Canada I learned that such a project would never be allowed in this company’s home waters.”

This loss adds to PNGs public debt which is at about 33 per cent of GDP. Australia has recently committed a $AUD300 million loan as direct budget assistance to ‘aid its economic reforms and government financing.’

Mr Mesulam continued, “A recent article in PNG Business News seems to suggest the ‘new’ Nautilus has applied to the PNG Mineral Resources Authority to vary the existing mining lease. This is against a background of calls from right across Papua New Guinean society to cancel the licenses.”

An added mystery is that someone is still buying shares in the old, defunct company. When Nautilus was removed from the Toronto Stock Exchange as part of the bankruptcy proceedings, it moved to unregulated trading of the now virtually worthless stock. Yet there has been a recent spike in buying that sent the price up to 0.003 cents per share.

“So many questions, and yet to date no answers. The company still looks to be lost at sea with no life raft in sight” claimed Mr Whitmore.

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Nautilus Minerals officially sinks, shares still trading

Amanda Stutt | Mining dot com | November 26, 2019 

Nautilus Minerals, one of the world’s first seafloor miners, officially went bankrupt this week, its court-appointed monitor, Price Waterhouse Cooper reported.

Nautilus filed for protection from its debts in a Canadian Court in February 2019. The company tried to restructure but it failed to find any buyers for its assets. In August 2019, court approval was obtained for creditors to liquidate the company to get back a fraction of what they were owed.

IN THE PROCESS, NAUTILUS HAS LEFT THE PAPUA NEW GUINEA GOVERNMENT FACING A DEBT EQUIVALENT TO ONE-THIRD OF THE COUNTRY’S ANNUAL HEALTH BUDGET

The Vancouver-based company was trying to develop its Solwara 1 deep sea gold, copper and silver project, off the coast of Papua New Guinea (PNG), but the project was plagued with community opposition and financial setbacks.

In June, the owner of the shipyard where the company’s support vessel was being made said it had cancelled the contract with the supplier chosen  to build its ships after Nautilus failed to pay the third installment of the contract price — $18 million before interest.

Local communities opposed to Nautilus’ Solwara 1 project in their seas are still opposed to the project, and there are still legal cases in the PNG court system.

In the process, Nautilus has left the Papua New Guinea government, which still owns a 15% stake in the Solwara I project as well as equipment, facing K81.5 million ($24 million) in debt.

“The two main shareholders – MB Holding and Metalloinvest – have effectively taken control of this ‘new’ Nautilus at the expense of major creditors and hundreds of small shareholders,” Andy Whitmore, advocacy officer, Deep Sea Mining Campaign, said in a press release.

Court papers noted that Nautilus had two distinct business units, one dealing with polymetallic nodules, and one dealing with seafloor massive sulphides, which includes the Solwara 1 project in PNG. It is therefore unclear which, if either of the business units, the new company will concentrate on.

“Nautilus gave the impression that the new company was ready to roll. But it has been over a month since the confirmation and there’s been no other information on what Nautilus’ new plans will be,” Whitmore said.

Nautilus stated in court papers that once liquidation occurs, there may still be a buyer for at least some of the new company’s assets.

A PNG Business News report suggests the new Nautilus has applied to the PNG Mineral Resources Authority to vary the existing mining lease.

When Nautilus was removed from the Toronto Stock Exchange as part of the bankruptcy proceedings, it moved to unregulated trading, with a recent spike in buying.

At market close Tuesday, Nautilus Mineral’s shares had been traded 310,769 times on the OTC, with the stock priced at a penny.

Deep Sea Mining company sinking in deep water

Deep Sea Mining Campaign |26 June 2018

Nautilus Minerals once again faced challenges at its AGM in Vancouver. As the financial crisis mounts Nautilus’ dreams to undertake the world’s first experimental deep sea mine, the Solwara 1 project in Papua New Guinea, look ever more distant. [1]   

Nautilus has been hit hard by the divestment of Anglo American who announced their break with the company just before their own AGM in May this year.

Andy Whitmore of the Deep Sea Mining campaign stressed, “Anglo’s decision to divest, on top of Nautilus’s myriad problems, proves the company is running out of both credit and credibility. It is not just the company that is sinking, but the project – and the concept of deep sea mining itself – that is going down with it.”

Nautilus is now propped up by its two major shareholders – Russian mining company Metalloinvest and Omani conglomerate MB Holdings, both of whom are lending significant amounts of money in bridging loans at 8% interest. [2]

“Nautilus is increasingly controlled by these two entities, which in the case of Metalloinvest opens up serious worries that it could be hit by further US sanctions against Russian oligarchs.” continued Whitmore. [3]

“The company is in a parlous state with its finances. Even if Nautilus was to become bankrupt and someone else took over the project, they would face the same social and legal – let alone environmental – risks.”

“Nautilus is desperate for further funding. Noting it may not succeed the company has introduced cost saving measures including reducing its workforce and not entering into any new construction contracts.” [4]

The reluctance of investors was ascribed by a recent article to “the unknown feasibility of this type of activity and concern that they could potentially be deemed to be complicit in environmental degradation.” [5]

Growing local opposition in Papua New Guinea has seen communities come out in force at formal hearings to oppose the granting of Nautilus’s exploration licences and a legal challenge regarding Solwara 1 has been lodged. [6]

Jonathan Mesulam of Solwara Warriors noted “New Irelanders and communities across the Bismarck Sea call for a ban on deep sea mining. One needs only to look at the history of the civil war in Bougainville Island and the current civil unrest against the Exxon project in Hela and Southern Highlands Province to see how local communities react to projects that ignore their concerns.” [7]

“Canadian mining companies have a shameful history of environmentally destructive mining in Papua New Guinea,” says Catherine Coumans of MiningWatch Canada, “but this project may prove to have the most widespread and irreversible impacts of all.”

“No Canadian company or investors should want to be involved in this experimental destruction of the seabed and of rare hydrothermal vents.”

Nautilus Minerals start date for production has been pushed back to at least the third quarter of 2019, so any potential income will be absorbed by mounting loan interest payments and costs. Adding to their problems is the impounding of their production support vessel due to the lack of finance to complete it. [8][9]

NOTES
[1] If it proceeds the Solwara 1 mine will be located in the Bismarck Sea of Papua New Guinea, approximately 25 km from the coastline of New Ireland Province, about 35 km from Duke of York Islands and 60 km from Kokopo township in East New Britain.
[2] As at May 15, 2018, an amount of $11.25 million in bridge loans have been advanced to Nautilius and a total of 48,324,740 share purchase warrants have been issued to the major shareholders as partial consideration for such bridge loans. The loans bear interest at 8% per annum,  payable bi-annually in arrears with a one year maturity date. See Nautilus statement at www.nautilusminerals.com/irm/PDF/2024_0/MDAfortheperiodendedMarch312018
[3] USM Holdings, the ultimate parent holding company of Metalloinvest Holding (Cyprus), is
controlled by Russian billionaires Alisher Usmanov (49%) and Vladimir Skoch (30%). In the 6 April sanctions imposed by the US, Vladimir Skoch’s son was one of the seven Russian tycoons sanctioned, while David Kramer, a State Department official under President George W. Bush, said he was surprised by the exclusion of Alisher Usmanov. Seehttps://www.bloomberg.com/news/articles/2018-04-11/deripaska-s-two-decade-wooing-of-u-s-ends-in-financial-meltdown and https://www.forbes.com/sites/angelauyeung/2018/04/06/u-s-treasury-department-announces-new-sanctions-against-7-russian-billionaires/#4ce07d243752
[4] See Nautilus statement at  www.nautilusminerals.com/irm/PDF/2024_0/MDAfortheperiodendedMarch312018
[5] See for example posting on the investor bulletin board Shareholders Unite –http://shareholdersunite.com/mybb/forumdisplay.php?fid=41 including quotes such as “So, many of us have been holding on to this stock for years now … and hoping for the best. I’ve always felt generally positive about Solwara 1 and felt that eventually, they would pull a rabbit out of a hat. …  However, I’ve never felt quite as down and out on this stock/company as I do right now.”
[6] Legal action launched over the Nautilus Solwara 1 Experimental Seabed Mine, statement 6 December 2017 –http://www.deepseaminingoutofourdepth.org/legal-action-launched-over-nautilus-solwara-1/
[7] Hela landowners vandalise gas project, block road in PNG, Radio New Zealand International, 19 June 2018,https://www.radionz.co.nz/international/pacific-news/359983/hela-landowners-vandalise-gas-project-block-road-in-png
[8] See Nautilus statement http://www.nautilusminerals.com/irm/PDF/2020_0/Nautilusreceivesadditionalbridgeloanandprovidescorporateupdate
[9] Canada’s Nautilus aiming to start marine mining in 2019 despite enviro concerns, Dylan Slater, Creamer Media’s Mining Weekly, 1 June 2018 – http://www.miningweekly.com/print-version/canadas-nautilus-aiming-to-start-marine-mining-in-2019-despite-enviro-concerns-2018-06-01

Namibian Chamber of Commerce against experimental seabed mining

Kenya Kambowe | Namibian Sun | 4 November 2016

The Namibia Chamber of Commerce and Industry (NCCI) northern branch has condemned the mining of phosphate off the Namibian coast, saying that the interest of Namibians should always come first.

The northern branch also slammed the issuing of the marine phosphate environmental clearance certificate to Namibian Phosphate Mining (NMP) by the environmental commissioner Teofilus Nghitila.

The certificate was subsequently withdrawn by environment minister Pohamba Shifeta who has since ordered Nghitila to inform the Ministry of Fisheries and Marine Resources, the fishing industry and all other interested parties to finalise their inputs within three months.

The cancellation comes in the wake of an urgent High Court application filed by several fishing associations citing irregularities in the issuance of the environmental clearance certificate. The NCCI is convinced that marine phosphate mining is a harmful process that poses a great risk to marine ecosystems.

“The extraction of marine phosphate is associated with a lot of possible irreversible destruction which can and will be detrimental to the sea ecosystem, with absolutely no possible mitigation factors,” the statement read.

“The negative destruction ranges from extraction to the end results and it gets worse with every stage of beneficiation.” The statement acknowledges the contribution of the fishing industry to the Gross Domestic Product (GDP) of the economy and its significant role in reducing the high unemployment rate in the country.

Furthermore, the chamber argues that the foreign shareholding of NMP will contribute insignificantly to the Namibian economy. NMP is owned by Mawarid Mining LLC (85%), an Omani company, and Havana Investments (Pty) Ltd (15%), a Namibian company, belonging to businessman Knowledge Katti.

“It is important to note that fisheries contribute immensely to our GDP. It brings in a lot of foreign currency through the export of our fish products, most of which are value-added products. Through the value addition, a lot of employment opportunities are created and a lot of Namibians are employed,” the statement further says.

“It is therefore important to understand that, in the first place, phosphate mining will not benefit our sustainable economic development in the long run; no matter how beautiful the picture might be painted. The biggest stake of the shareholding belongs to the foreigners.”

Namibian seabed mining approval suspended amid corruption claims

Environment and Tourism Minister, Pohamba Shifeta

See also: Nautilus Minerals linked to corruption allegations around Namibian seabed mining

Shifeta suspends NMP phosphate certificate

Albertina Nakale | New Era | November 3, 2016

Environment and Tourism Minister Pohamba Shifeta has ordered that the environmental clearance certificate granted to Namibia Marine Phosphate (NMP) to mine phosphate off Namibia’s coast be set aside for the sake of the public good.

This follows a massive public uproar surrounding the perceived secretive issuance of the certificate, which was granted by Environmental Commissioner Teofilus Nghitila on September 5, 2016.

Critics of the proposed contentious project have demanded updated scientific facts in order to make an informed decision on the issue. The decision of Nghitila to grant the certificate to NMP prompted considerable debate and reaction.

NMP’s Sandpiper project constitutes more than N$5 billion in investment capital and is estimated to yield 1.8 billion tonnes of phosphoric sand. NMP is owned by Mawarid Mining (Namibia) (42.5 percent) and Sea Phosphates (Namibia) (42.5 percent), both wholly owned subsidiaries of Mawarid Mining LLC (85 percent), an Omani company, and Havana Investments (Pty) Ltd (15 percent), a Namibian company.

Shifeta yesterday delivered his more than two-hour ruling in the matter between appellant Michael Gaweseb – who is a trustee of Economic Social Justice Trust – Nghitila and NMP. The hearing was held on October 31, when Gaweseb appealed against the commissioner’s decision to grant the certificate to NMP, based on two reasons: that the activity of phosphate mining has a long devastatingly adverse impact on the marine environment, and lack of public consultation.

Shifeta said he took the liberty to study the facts and all evidence presented before him by the appellant surrounding the issuance of the phosphate certificate.

Although Shifeta said there was no secrecy surrounding the awarding of the certificate – after closely studying the evidence presented before him he reached the conclusion that the certificate granted by Nghitila should be set aside and that the commissioner should notify the Ministry of Fisheries and Marine Resources, the fishing industry and all other interested parties to finalise their inputs in the report within three months. He said that in accordance with Article 95 (1) of the Namibian Constitution, which evidently underlines the importance of environmental protection, he reached his conclusion based on that provision and the cause of the public good.

“That whole process of consultation should be completed within six months from today. That this order is with immediate effect and binds all parties, directly or indirectly affected, unless set aside by the High Court as per section 51 (1) of the Act,” Shifeta announced.

He also agreed with the appellant on the issue of further public consultation, saying caution should be taken to balance the rights of the respondents and the sake of the public good.

“Accordingly, Section 50 of the Act and Regulation 25 as its delegated law should be applied with caution and in a special manner because of the value and obligations Article 95 (1) of the Constitution impose on citizens and residents of Namibia,” he said.

He still maintains that the fisheries ministry failed to respond to the request of the commissioner for a review.

“It is clear that on 13 June 2016, the commissioner’s request made to the Ministry of Fisheries and Marine Resources to review the final report was ignored or not seen necessary to respond to, hence the commissioner’s correct application of Section 44 (2) of the Act (Environmental Management),” Shifeta maintained.

He defended that the Environmental Management Act of 2007 only came into force in 2012, saying it’s a brand-new legislation while the mining licence was issued in 2011.

“I will accept the notion that ‘ignorance of the law is not an excuse’. However, you may agree with me that the fishing industry is a big industry whose contribution to the national economy is very significant. The fishing industry, I assume, was supposed to channel their inputs to the final report for review through their line ministry but the ministry failed to respond to this, for the reason only known to them,” Shifeta said, adding that such failure cannot be blamed on the entire fishing industry.

NMP, in a statement issued on Sunday, challenged critics of its envisaged project to present counter-scientific evidence to back up claims that seabed mining would destroy the country’s marine life.

Nautilus Minerals linked to corruption allegations around Namibian seabed mining

The giant machines Nautilus wants to use to mine the seafloor in Papua New Guinea

PNG Exposed | 31 October 2016

Prospective Solwara 1 seabed mining company Nautilus Minerals can be linked to the allegations of corruption surrounding a controversial decision by the Namibian government to allow seabed mining.

Namibia’s Fisheries Minister, Bernhard Esau, is crying foul over a government decision to allow phosphate mining on the seabed.

He says the decision to grant an environmental permit to Namibian Marine Phosphate was done behind closed doors and in defiance of an earlier government imposed ban. As Fisheries Minister, he says he was denied an opportunity to present his own proposal for a detailed 3-5 year environmental study before any approvals were granted.

Namibian Marine Phosphate is owned by the same company, MB Holdings, that is the largest shareholder in Nautilus Minerals.

MB Holdings owns 85% of Namibian Marine Phosphate through its wholly owned subsidiary, Mawarid Mining LLC.

MB Holdings is owned by Omani business man Mohammed Al Barwani.